Restoring private sector's vigor is quintessential for recovery
Minister of Economy and Finance Hong Nam-ki said Monday that the government would do everything it could to keep the country's economic growth rate higher than 2.2 percent to 2.3 percent next year. The International Monetary Fund and the Organization for Economic Cooperation and Development projected the Korean economy could grow 2.2 percent and 2.3 percent, respectively, in 2020. The government's growth projection, which will be released in mid-December, is unlikely to be much different from these.
In a news conference, Hong, the economic czar of President Moon Jae-in, said he felt regret that the country had failed to hit the growth target of 2.4 percent to 2.5 percent this year. Most economic experts, however, say it will be difficult for Korea to even attain 2 percent growth for 2019. If such concerns become a reality, it will mark the lowest growth since 2009 when the economy expanded a mere 0.8 percent.
All this explains why the government's economic policy should focus on restoring the nation's growth potential. If the economy remains mired in low growth, it is feared to follow the Japanese example of a long-term slump. To bolster the sagging economy, the government and the central bank should mobilize all fiscal and monetary tools available while maximizing the private sector's capacity.
However, fiscal input should function as pump-priming to restore the private sector's vigor. Minister Hong also said, "The biggest problems facing the economy are the loss of vitality in the private sector, sluggish growth amid the global downturn, falling growth potential due to restructuring failure, and low productivity."
To induce investment from hesitant businesses, the government should first remove obstacles. If the National Assembly fails to pass deregulatory bills within the current session, they will die. The government and the ruling party should, of course, show more active statesmanship, but the opposition parties' cooperation is a prerequisite. The governing and opposition camps need to work together on economic issues, which are directly related to people's livelihoods. Now is the time for them to demonstrate bipartisanship and help the economy regain its vigor.
Minister of Economy and Finance Hong Nam-ki said Monday that the government would do everything it could to keep the country's economic growth rate higher than 2.2 percent to 2.3 percent next year. The International Monetary Fund and the Organization for Economic Cooperation and Development projected the Korean economy could grow 2.2 percent and 2.3 percent, respectively, in 2020. The government's growth projection, which will be released in mid-December, is unlikely to be much different from these.
In a news conference, Hong, the economic czar of President Moon Jae-in, said he felt regret that the country had failed to hit the growth target of 2.4 percent to 2.5 percent this year. Most economic experts, however, say it will be difficult for Korea to even attain 2 percent growth for 2019. If such concerns become a reality, it will mark the lowest growth since 2009 when the economy expanded a mere 0.8 percent.
All this explains why the government's economic policy should focus on restoring the nation's growth potential. If the economy remains mired in low growth, it is feared to follow the Japanese example of a long-term slump. To bolster the sagging economy, the government and the central bank should mobilize all fiscal and monetary tools available while maximizing the private sector's capacity.
However, fiscal input should function as pump-priming to restore the private sector's vigor. Minister Hong also said, "The biggest problems facing the economy are the loss of vitality in the private sector, sluggish growth amid the global downturn, falling growth potential due to restructuring failure, and low productivity."
To induce investment from hesitant businesses, the government should first remove obstacles. If the National Assembly fails to pass deregulatory bills within the current session, they will die. The government and the ruling party should, of course, show more active statesmanship, but the opposition parties' cooperation is a prerequisite. The governing and opposition camps need to work together on economic issues, which are directly related to people's livelihoods. Now is the time for them to demonstrate bipartisanship and help the economy regain its vigor.
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